Making Sense of Diversification

Peter Earl and Bruce Littleboy

Chapter 7 in G.L.S. Shackle, 2014, pp 138-153 from Palgrave Macmillan

Abstract: Abstract Although economists are prone to adhere to or reject theories on the basis of whether or not key assumptions are consistent with their habitual modes of thought, they are not averse to looking at the predictive content of theories if it suits them to do so. In the case of Shackle’s radical alternative to probabilistic models of choice, critics found themselves presented with a golden opportunity to reject it on empirical grounds without any need to undertake empirical work. A major prediction of the theory simply did not ring true, and it was Shackle himself who drew it to his readers’ attention. In this chapter, we consider this problematic aspect of Shackle’s model and the opportunities he missed not merely to deal with it but also to mount an even more persuasive case against probabilistic thinking.

Keywords: Systemic Risk; Superannuation Fund; Capital Gain; Indifference Curve; Portfolio Choice (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:pal:gtechp:978-1-137-28186-9_7

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DOI: 10.1057/9781137281869_7

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